Monday, December 7, 2009

We've had quite a few posts on Bolivia and lithium, I've taken to leading off with this quote, links below:

Butch Cassidy:

"Kid, the next time I say, 'Let's go someplace like Bolivia,'let's go someplace like Bolivia."- Butch Cassidy & the Sundance Kid (1969)

From Bloomberg:

...Waist-high slabs of salt are piled around a pond that’s shimmering in the sun. Francisco Quisbert, an Indian peasant leader known as Comrade Lithium, sits inside a crumbling adobe building on the edge of the desert. He’s explaining how Bolivia, South America’s second-poorest country, will supply the world with lithium, which will be used in batteries that power electric cars.

“We have this dream,” Quisbert, 65, says. “Lithium could bring us prosperity.”

The world’s largest untapped lithium reserve -- containing enough of the lightest metal to make batteries for more than 4.8 billion electric cars -- sits just below Quisbert’s feet, according to the U.S. Geological Survey.

The automobile industry plans to introduce dozens of electric models with lithium batteries in the next three years. Bolivian President Evo Morales says his country can become one of the world’s biggest suppliers of lithium, making the nation of 10 million people a major player in the drive to cut the use of fossil fuels.

Even with its massive reserves, Bolivia has never built a lithium mine.

‘Lithium Is the Hope’

“Lithium is the hope not only for Bolivia but for all the people on the planet,” says Morales, who, according to polls, was probably elected to a second term in elections yesterday.

If Morales gets his way, he will upset a market now controlled by two publicly traded companies: Princeton, New Jersey-based Rockwood Holdings Inc., which is 29 percent owned by Henry Kravis’s KKR & Co., and Santiago-based Sociedad Quimica y Minera de Chile SA, or Soquimich.

These two companies produce about 70 percent of the world’s low-cost lithium from a salt flat in Chile, just across the Andes from Bolivia.

Investors are wooing President Morales to be partners in building a Bolivian mine. French billionaire Vincent Bollore, South Korea’s LG Corp. and Japan’s Mitsubishi Corp. and Sumitomo Corp. offered to join with Morales in the project. They’re already helping the government at no cost to design the mine.

So far, Morales has rebuffed outside investment, saying he wants to keep lithium in government hands to provide local Indians with jobs. Morales says he may change his mind if Bolivia can’t raise the $800 million it would cost for construction of a mine and processing plants.

‘Like Saudi Arabia’

“If the Bolivian state had the money, it would invest it,” he says. “If the state doesn’t have cash, then we’re going to look for investment.”>>>MORE

No one said there was a shortage. The question is geopolitical and strategic. It is the same situation with lithium. There isn't a shortage in the foreseeable future. In Li, The potential problem arises from the fact that Evo Morales controls half the world's known reserves of lithium. The calculus of signing agreements with him is closer to that required when dealing with Hugo Chavez than that required when dealing with the Japanese....